Companies denied VAT as a result of being part of fraudulent VAT chains can
reclaim the tax, the European Court of Justice has ruled.
The case, named after Bond House, one of the companies involved, is set to
cost the Treasury hundreds of millions of pounds.
The government had tried to pin the bill for the fraud, which involves
fraudsters selling goods at full price including VAT, pocketing the tax and
disappearing, on companies buying those goods at the end of the chain.
The ECJ has rejected the government’s view that such companies, unwitting
victims of the trade, were engaged in non-economic activities.
The ECJ said today: ‘In a supply chain, each transaction must be considered
on its merits as a separate economic activity. The right of a taxable person to
deduct VAT cannot be affected by the fact that, without that person knowing or
having any means of knowing, another transaction in the chain is vitiated by
More news, and analysis of the verdict, soon.
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